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Settlement talks pending on school tax case

Settlement talks pending on school tax case

Michele Ellson

Monday, February 10, 2014 - 00:05

The school district and commercial property owners who a court decided were unfairly taxed under a 2008 school parcel levy are working to negotiate a settlement in the property owners’ five-and-a-half year old case.

Attorneys for both the school district and the property owners are set to meet in the spring and could wrap up in April, court filings show. A hearing to discuss the parties’ settlement efforts is scheduled for May.

“We are going to mediate the case to try and reach a fair and equitable resolution for all the parties,” said David Brillant, an attorney for some of the property owners.

Commercial property owners filed two separate lawsuits in 2008 challenging the Measure H school parcel tax. They argued the school district illegally levied different charges on homeowners, who paid $120 a year under the tax, and commercial property owners, who paid 15 cents per square foot of property they own up to a cap of $9,500 a parcel.

A trial court judge agreed with the school district’s argument, ruling in 2010 that state law allowed the district to charge different classifications of property owners different taxes. But a state appeal court disagreed, ruling in 2012 that the tax was levied illegally because it wasn’t uniformly applied to all property owners and returning the case to the local trial court for a determination on what amounts the district should repay.

One of the original plaintiffs in the suit, Edward Hirshberg, filed a new lawsuit in December seeking a refund of the $16,644.06 in taxes he paid on four commercial properties under Measure H. The judge handling that case recently granted Hirshberg class action status for the case, which seeks refunds for 629 property owners.

The next hearing in that case is scheduled to take place in early March.

Measure H was levied over the course of three years, from 2008-09 to 2010-11. A second tax that would also have charged homeowners and commercial property owners different rates, Measure E, was narrowly rejected by voters. But a third tax, Measure A – which charges all property owners the same rate – was approved in 2011 and will be in effect for seven years.

The school board voted in March to set aside $5.8 million to cover any refunds commercial property owners may ultimately be eligible for, after the Alameda County Office of Education sought to ensure the school district had money set aside to cover the potential cost. The district could owe as much as $7.4 million of the $12.5 million collected under Measure H if commercial property owners are to be fully repaid the additional tax amounts.

The property owners’ success in the case prompted their attorney to file a quartet of similar cases against other California school districts where voters had recently approved parcel taxes that charge different classes of property owners different amounts under existing parcel taxes. Another district chose to change the structure of a tax headed for the ballot after Alameda Unified’s request to appeal the appeals court ruling was denied.

A bill by state Assemblyman Rob Bonta that sought to allow the school district to keep the money it collected under Measure H died in committee.

Separately, school district officials said they plan to continue pressing their case in a school funding lawsuit filed against the state. A local trial court dismissed the case in 2010, but the school districts and families who filed it appealed. They’re arguing that the state’s school funding system is irrational and inequitable and that they think lawmakers should be compelled to fix it.

An attorney for the state noted the new system was being put in place in a letter to the court in August – the last action on the case, court filings show – and Superintendent Kirsten Vital praised the new funding system at a recent school board meeting. Further action has not yet been scheduled for the case, the appeals courts’ online system shows.

State lawmakers are implementing a new system, called the local control funding formula, that Governor Jerry Brown has said is intended to equalize the amount of money school districts get from the state and to direct more of it to California’s neediest students – English language learners and students from low-income families. And Proposition 30, a temporary tax approved by voters last year, has freed up money for the state to spend on schools.

But both a school district spokeswoman – whose children are also plaintiffs in the case – and one of the attorneys working on it said there are a number of legal issues that are yet to be resolved, and that they look forward to giving oral arguments in the case.

Attorney Bill Koski called the new funding system “a start toward rationality” but said accountability measures that are to accompany it don’t ensure needy kids will get their needs met by it.

“The state school funding system remains woefully insufficient,” Koski said. “LCFF and Prop 30 did not change that state of affairs.”

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